Thought I'd look into the Naraha lithium hydroxide plant; its...

Thought I'd look into the Naraha lithium hydroxide plant; its history of development, where it is now and where it might be going to.

4. Where we are now.
This is what was said about Naraha in the quarterly summary released today:
"At Naraha, 464 tonnes of lithium hydroxide were sold and after completing work on productquality and operational improvements, battery grade qualification has commenced withcustomers in early July."

and this is from the body of the quarterly:
"Equipment repairs and improvements identified during commissioning and ramp up wereimplemented during the quarter. The operational focus continues to be on progressively increasingproduct quality and volumes to design capacity.464 tonnes of technical grade lithium hydroxide were sold to third party customers during the quarter.The battery grade hydroxide qualification process with customers commenced with samples to beproduced post quarter."

So here we are, at last, Naraha starting to produce the battery grade lithium hydroxide that it was purpose built for. It has taken over six and a half years from conception to get here. But now with the qualification process underway for its product and with the Olaroz 2 operation also finally into production I reckon Allkem has reached a major inflection point.

Back in 2020, from memory, the company floated the idea of a second stage at Naraha. I think the time is ripe for Allkem and Toyota Tsusho to announce that they are ready to proceed with that second stage expansion at Naraha.

Anyway, here's a potted history of the Naraha project to date.

1. From the beginning.
The very first mention (that I could find) of what is now Naraha - ASX announcement of 15 December 2016:
"If a lithium hydroxide plant is constructed in Japan, the approximate capital cost will be US$30 million beforeany government incentives."

From the Q2FY17 (December 2016 quarter) quarterly released 30 January 2017:
"Construction of a 10,000 tonne per annum battery grade lithium hydroxide plant will be expeditedfollowing completion of initial site visits in Japan. Three engineering firms (Svenson, GEA and Veolia)have submitted proposals to construct the plant which will be based on a proven, off the shelf designand constructed on a turn key basis.The project is being fast tracked to meet growing demand which is not being fully met with constrainedfeedstock supply to exising hydroxide plants. At least 50% of estimated capital costs are expected to beprovided by the Japanese government in support of their world class battery industry."

From the Q4FY17 quarterly released 19 July 2017: "(from the summary) Test work successfully completed with two specialized engineering firms to finalise the processengineering for a 10,000 tonne per annum battery grade lithium hydroxide plant. Capital cost andoperating estimates will be received from both contractors during the September quarter 2017... (from the body) Subject to joint venture approvals and finalisation of financing and permitting, construction couldcommence in November 2017 with commissioning 12 months later. Orocobre does not anticipate theneed to raise equity capital for this project."

ASX announcement of 16 January 2018: "Orocobre and Toyota Tsusho Corporation (“Toyota Tsusho”) are finalising plans to jointly develop a10,000 tpa lithium hydroxide plant in Fukushima, Japan with expected operating costs ofUS$1,500/tonne (down from US$2,500/tonne). Development subsidies of approximately US$27 millionhave been indicatively approved (but not yet finalised) by the Japanese Government. After subsidies andproposed Japanese bank debt financing (which is proposed to be at subsidised interest rates),Orocobre’s equity contribution will be approximately US$6 million towards the estimated total capitalcost of US$60-70 million. A final investment decision is expected in mid calendar year 2018."

2. Final Investment Decision (FID), finally.

ASX announcement of 12 April 2019: "Orocobre willhold a 75% economic interest in the project with operations to be managed by TTC (Toyota Tsusho)...Construction of the Naraha Lithium Hydroxide Plant isexpected to commence during H1 CY19 with commissioning to commence during H1 CY21." As an aside, by now Martín Pérez de Solay was the MD and CEO so the development and delivery of Naraha is another feather in his cap (not sure what old mate Pall Graves was up to back then - yes, that's right, now I remember, he was underachieving).

ASX announcement of 6 August 2019: Naraha Lithium Hydroxide Plant Groundbreaking Ceremony

3. First Production of Technical Grade Lithium Hydroxide.

ASX announcement of 15 November 2022: First Lithium Hydroxide Successfully Produced at Naraha